USD/JPY risks a deeper pullback if 114.40 is breached in the short-term horizon, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “Yesterday, we held the view that USD ‘could edge lower but any decline is expected to encounter solid support at 114.40’. USD did not challenge the 114.40 level as it rebounded strongly from 114.48 (high has been 115.23). The rapid rebound appears to be running ahead of itself and USD is unlikely to strengthen much further. For today, USD is more likely to trade within a range of 114.70/115.30.”

Next 1-3 weeks: “We highlighted yesterday that downward momentum has improved slightly and there is room for USD to edge lower. We added, USD ‘has to break the solid support at 114.40 before a more sustained decline can be expected’. USD subsequently dropped to 114.48 before rebounding strongly to a high of 115.23. There is no change in our view but a break of 115.30 (no change in ‘strong resistance’ level) would indicate that USD is not ready to breach 114.40.”